Yes, America needs a recession. Bernanke and Paulson won't admit it. And investors hate them. We're all trapped in outdated 1990s wishful thinking about a "new economy" and "perpetual growth." But the truth is, not only is a recession coming, America needs a recession. So think positive: Let's focus on 17 benefits from this recession. To begin with, recession may be an understatement. Jeremy Grantham's GMO firm manages $150 billion. In his midyear report before the credit crisis hit he predicted: "In 5 years I expect that at least one major 'bank' (broadly defined) will have failed and that up to half the hedge funds and a substantial percentage of the private-equity firms in existence today will have simply ceased to exist." He was "watching a very slow motion train wreck." By October, it was accelerating: "Train hits end of track at full speed." http://www.marketwatch.com/news/sto...x?guid={08D803FF-60CE-4868-BDB8-D0CFFE9851B0} What we need is more quality journalism and commentators !
What we really need is to get back to the constitution. Banks quite literally have the legal protection of the fed to counterfeit money and loan it at interest. Anybody here want a 1,000,000 loan? (no really, I have the money...really I do...just let me power up the printer and...) There it is hanging out all pink and naked.
American economy does not consist only of funds managers and banks. USA is one of the biggest export countries of agricultural and high tech goods in the world. It also has a big stake in economies around the world through cross-holdings, patent holdings, etc. USA cannot go into a deep recession even if it tries at this point. Productivity is just too high for that and unemployment is too low. Exports are surging. How in the world would anyone think that a country with surging exports could go into recession? Maybe a fund manager who is short up to his neck...
The Basel II Framework describes a more comprehensive measure and minimum standard for capital adequacy that national supervisory authorities are now working to implement through domestic rule-making and adoption procedures. It seeks to improve on the existing rules by aligning regulatory capital requirements more closely to the underlying risks that banks face. In addition, the Basel II Framework is intended to promote a more forward-looking approach to capital supervision, one that encourages banks to identify the risks they may face, today and in the future, and to develop or improve their ability to manage those risks. As a result, it is intended to be more flexible and better able to evolve with advances in markets and risk management practices.